NISP TB Bukit Asam signs long term contract with PLN (PTBA, Rp18,900, Buy)

· TB Bukit Asam signed a 20-year contract to supply an additional 14.5 million tons of coal a year to Perusahaan Listrik Negara (PLN). TB Bukit Asam currently supplies 8.1mn tons coal to PLN, 6.1mn tons of which are conveyed to Suralaya power plant and the balance are for Tarahan and Bukit Asam power plants.
· TB Bukit Asam added that it will start to fulfill the contract after the company completed its railway project in order to boost logistic capacity.
· There is no further explanation when this contract will be started, however, we foresee this is prepared to support PLN’s 10,000 MW project.
· Nevertheless, despite no further details, we see this contract is very positive for TB Bukit Asam. With this secured demand for its coal, the company’s railway projects are becoming bankable where the company could utilize the contract to obtain financing to support the projects.
· Currently, PTBA is trading at 2011F PER of 14.9x and EV/EBITDA of 12.9x, Buy.

Mansek UNTR:7M10 heavy equipment unit sales up 87%yoy (UNTR,Rp18,700,Buy,TP:Rp21,700)

As of 7M10 heavy equipment unit sales reached 3200(+87%yoy)representing some 64%of our and UNTR ’s Fy10F of 5k units.On mom basis it actually fell a bit by 8%to 468 units .Mining sector continues to be the biggest demand driver with some 59%of total units sold as of 7M10.We continue to maintain our FY10F of 5k considering some seasonality in the months of Sept and Dec.We currently have a buy on the stock PER11F of 13.6x with tp of Rp21,700.

NISP United Tractors maintains production speed (UNTR, Rp18,700, Hold)

Despite posting a MoM decrease in its heavy equipment sales last month, UT managed to post a stable coal production of 6.3mn tons in its mining contractor business. During July, Pama, UT’s arm in this business, also posted a stable amount of overburden at 53.7mn tons compared to 53.8mn tons a month earlier.

Meanwhile, in its coal mine business, UT sold a higher volume of 219k tons last month that made the company’s 7M10 coal sales volume reached 1.42mn tons, 1.9%YoY higher from 1.39mn tons in 7M09.

Overall, the company’s operational data came in inline with our expectation, however, as the company pushes its mining coal contracting output amid rainfall season, it may affect UT’s profitability in 3Q10.

Currently, UNTR is trading at 2011F PER of 12.8x and EV/EBITDA of 6.7x, Hold .

NISP United Tractors post lower sales volume last month (UNTR, Rp18,800, Hold)

• During July 2010, UT’s sales volume stood at 468 units or 7.7% MoM lower from 507 units a month earlier. However, as the figure is still above the average monthly sales volume during January – June 2010 of 455 units, we view this condition is relatively normal.

• With this July figure, during 7M10 UT has sold 3,200 units of heavy equipment, which is on track with the company’s target of 5,000 units this year. This target translates into 1,800 units still needed to be sold in August – December, or equal to an average monthly sales volume of 360 units.

• The company has not given further details on its July operational data, where we need to see its production volume on mining contracting and coal mining business during heavy rainfall condition as this may affect profitability in 3Q10.

• Currently, UNTR is trading at 2011F PER of 12.9x and EV/EBITDA of 6.8x, Hold.